Hi Don,

I have a little more time on my hands this morning and here is the direct quote from VCAT’s ‘Renting a Home – A tuide for tenants and landlords’

If the tenancy agreement is a fixed term agreement, the landlord or agent cannot increase the rent before the end date, unless the agreement states otherwise.

In any case, a landlord or agent must not increase the rent payable under a tenancy agreement more than once in any six-month period.

The landlord or agent must give the tenant at least 60 days notice of any rent increase using the ‘Notice of Rent Increase to Tenant/s of Rented Premises’ form.

If the tenancy agreement is a fixed term agreement, the landlord or agent cannot increase the rent before the end date, unless the agreement states otherwise.

In any case, a landlord or agent must not increase the rent payable under a tenancy agreement more than once in any six-month period.

The landlord or agent must give the tenant at least 60 days notice of any rent increase using the ‘Notice of Rent Increase to Tenant/s of Rented Premises’ form.

When a tenant thinks the rent is too high
In certain circumstances, tenants can write to the Director of Consumer Affairs Victoria for a rental assessment if they think the rent or proposed rent is too high.

This can only happen when:
• the landlord or agent has given a ‘Notice of Rent Increase to Tenant/s of Rented Premises’ that the tenant thinks is excessive (after considering market rent) or
• the landlord or agent has reduced or withdrawn services, facilities or other items that are part of the existing tenancy agreement.

A request for a rental assessment must be made in writing within 30 days of receiving the ‘Notice of Rent Increase to Tenant/s of Rented Premises’.

The tenant has 30 days from receiving the rent assessment report in which to apply to VCAT for a hearing. VCAT may set a maximum rent, which then stays in force for 12 months.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958

Hi Don,

You have just demonstrated why renting to family and friends can be problematic unless clear guidelines are maintained.

Your friend is out of line – according to the Victorian Consumer Affairs there is no such numeric restriction.

Checkout the VCAT website – I have a copy of the tenancy act of you want. Drop me an email with the subject Vic Tenancy Act and I’ll send you a copy.

Besides the guy has been there for five years anyway – what does he want?

I am also intrigued as to your method of determining the rent you want. I would suggest that you are leaving yourself short – let the market determine the rent and more often than not you’ll find yourself ahead – in this case potentially $40/week short.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958

Hi Ned,

From the ATO website CGT guidelines, hopefully this will address the first part of your first question.

CONSTRUCTING, RENOVATING OR REPAIRING A DWELLING ON LAND YOU ALREADY OWN

Generally, if you build a dwelling on land you already own, the land does not qualify for exemption until the dwelling becomes your main residence. However, you can choose to treat land as your main residence for up to four years before the dwelling becomes your main residence in certain circumstances.

You can choose to have this exemption apply if you acquire an ownership interest (other than a life interest) in land and you:build a dwelling on the land repair or renovate an existing dwelling on the land, or finish a partly constructed dwelling on the land.

There are a number of conditions that must be satisfied before you can claim the exemption. You must first finish building, repairing or renovating the dwelling and then: move into the dwelling as soon as practicable after it is finished, and continue to use the dwelling as your main residence for at least three months after it becomes your main residence.

The land, including the dwelling that is being built, renovated, repaired or finished on it, is exempt for the shorter of the following periods:
the four-year period immediately before the date the dwelling becomes your main residence, or
the period between the date you acquired the land and the date the dwelling becomes your main residence.

However, if after you acquired the land you or someone else occupied a dwelling that was already on the land, the period of exemption starts from the date that dwelling was vacated.

If a newly constructed dwelling is built to replace a previous dwelling that was demolished or destroyed, a full exemption is available when you dispose of the property if:
the original dwelling was your main residence for the full period you owned it, it was not used by you to produce assessable income and it was on land covering an area of 2 hectares or less
the new dwelling becomes your main residence as
soon as practicable after it is completed, it continues to be your main residence until you dispose of it and that period is at least three months you make a choice to treat the vacant land and new dwelling as your main residence in the period starting when you ceased occupying the previous dwelling and ending when the new dwelling becomes your main residence, and this period is four years or less, and you dispose of the land and new dwelling together.

If you make this choice, you cannot treat any other dwelling as your main residence for the period, except for a limited time under the ‘moving from one main residence to another’ rule (explained on page 55).

Therefore, if you have a dwelling you acquired on or after 20 September 1985 and you live in it while you build your new home, you must decide whether to: maintain the exemption for your old home, or have the exemption apply to the land (including the dwelling that is being built, renovated, repaired or finished on it) for the shorter of:
– the time from when you acquire the land until the new home becomes your main residence, or
– the four-year period immediately before the date on which the new home becomes your main residence.

If you acquired your old main residence before
20 September 1985, it is exempt. This means you will benefit from choosing to treat the land on which your new dwelling is to be built, renovated, repaired or finished as your main residence for the relevant dates above.

You cannot choose to have a shorter period of exemptionfor the new home in order to exempt the old home for part of the construction period.

EXAMPLE
Choosing to claim exemption for the land from the
date of construction;

Grant bought vacant land on which he intended to build a new home under a contract that was settled on 3 September 1999. He bought his previous home under a contract that was settled on 3 November 1991.

Grant finished building his new home on 8 September 2003. He moved into it on 7 October 2003, which was as soon as practicable after completion. He sold his previous home under a contract that was settled on 1 October 2003.

If Grant wants to, he can:
treat the new home as his main residence from
3 September 1999, and
claim the exemption for his previous home from
3 November 1991 to 2 September 1999.

Both homes are also exempt from 1 April 2003 to
1 October 2003, the date Grant disposed of the
old home. This is because the maximum six-month
exemption outlined in the section Moving from one
main residence to another on page 55 also applies.

If you were to die at any time between entering into contracts for the construction work and the end of the first three months of residence in the new home, this exemption can still apply.

If you owned the land as a joint tenant and you die, the surviving joint tenant (or if none, the trustee of your estate) can choose to treat the land and the dwelling as your main residence for the shorter of:
four years before your death, or the period starting when you acquired the land and ending when you die.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958

Hi Cyclist,

I am curious – is the link part of an affiliates program by which you get paid each time the link is followed?

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958

Hi Damien,

Exploring your follow up post further.

I still think that 6% on a carpark space is insufficient in investment terms given the commercial/business nature of the loan.

I would prefer something more standard in a residential property line as the banks will recognise a higher percentage in terms of security.

While this may not sound a big deal at the moment – it can be when you start out. One of the key points is maximising your leverage and this is where commercial/business lends (particularly carparks) fail.

Bear in mind as a cornerstone of your investment portfolio it (the carpark) will fail income and security tests for further investments into the future.

I am curious as to the reason that this ‘carpark’ has attracted your attention.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958

Hi Damien,

A few points –

Given ‘property’ is generally purchased for either growth or rent returns I am not sure that this is a good deal.

Rent return is pretty lousy. Using your figures of $40/week and $50K to buy return is only 4%.

Growth on carparks is limited as far as I can tell due to the limited market for them.

Finance will be a problem as banks will have an aversion to a carpark as suitable security.

Don’t mistake cheap for a good investment.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958

Hi all,

According to a recent Matusik paper herein are some information bits n pieces that may be of interest.

1. Qld’s population grew by 77000 people to end of March quarter of this year. This equates to a need for 30000 dwellings.
2. According to ABS 1000 people still move (and stay) to Qld each week.
3. Massive jobs growth in Qld – to the extent that the state is punching above its weight.
4. Qld residential market is moving to an undersupply situation again.
5. Vendors are holding off listing properties for sale hence the ‘perceived weak’ market being touted in media.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958

Hi Maruco,

I do have a copy of the index to ‘Trust Magic’ that you are welcome to have a look at to help you with yoru decision making.

Just drop me an email with ‘Trust Magic Index’ as subject and I’ll forward it through.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958

What’s a FHOG?

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958

Hi Hopes,

Not heard of them and may be off the track, in terms of service provided, but these questions/pointers may be of assistance.

Some thoughts for you to consider.
1. How long have NS been in business?
2. How many investment properties does your ‘consultant’ own?
3. How long has your consultant been investing?
4. How does your ‘consultant’ earn their money?
5. What will they get out of each and every purchase?
6. What service do they offer?
7. How much does it cost to use each aspect of their operations?
8. Can you use your own mortgage lender? Property manager? Valuer? If not – why not (it is a free world)?
9. What sort of after sales support do you get?
10. Does their approach fit comfortably with you?
11. How much pressure is bought to bear?
12. Are all decisions made in NS’s presence?
13. Are there rent guarantees? (Run away fast if there are!)
14. How does the price compare to similar properties on the open market?
15. ASIC/ Ministry of Fair TRading Issues?
16. Where have NS’s past sales been? What were they? How much is the open market paying for them now? What are they rented for now?
17. What are similar properties (to the one being considered) renting for? Check with a couple of REA in the area?
18. What is the vacancy rate in the area like?
19. What infrastructure is planned for the area?
20. Are brochures high on ‘gloss’ and ‘glitz’ and low on facts?

Just a few to get you started.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958